San Marcos Mercury | Local News from San Marcos and Hays County, Texas

May 27th, 2009
City could revise budget assumptions

STAFF REPORT

Downshifts in the economy have compelled San Marcos officials to consider revising budget assumptions for next year.

As discussions pertinent to the Fiscal Year 2009-10 budget begin, the San Marcos City Council directed the staff last week to work up a proposal that assumes no tax growth for the city’s revenues.

As a matter of budget policy, the city staff set to work on next year’s budget assuming three-percent growth in personnel costs and two-percent growth in all other costs. As personnel costs take up about 70 percent of the city budget, the total budget would increase a little less than three percent under those assumptions.

However, the council requested a parallel version of the budget, a “flat” version assuming no tax growth, following news that the city’s sales tax revenues are running behind last year’s totals. If the trend continues, San Marcos will endure a sales tax decline for the first time in more than 20 years.

The city’s May sales tax check from the state comptroller, coming in at less than $1.5 million, was 14.62 percent lower than the May 2008 check, which was more than $1.7 million. For the year to date, San Marcos is running about $350,000 behind last year in sales tax collections.

City Manager Rick Menchaca told council that the city is looking at a $70,000 shortfall on the present budget. Menchaca added that he doesn’t anticipate that tax revenues for FY 2010 will actually decline, however, because the preliminary property valuations from the Hays County Central Appraisal District (CAD) are up about three percent.

Under the original assumptions, a three-percent increase for personnel costs would add up to just more than $1 million in additional salaries and benefits per employee, according to a staff memo about the budget. Those costs don’t include the additional funding needed to address “meet and confer” agreements with civil service employees. Those agreements are yet to be made.

However, the costs do include funding for health insurance, retirement plans, merit increases and a compensation plan designed to bring the city even with market value for all other employees.

San Marcos Mayor Susan Narvaiz suggested that the city could easily close a $70,000 budget gap by cutting merit pay increases on the next budget. Narvaiz argued that employees in the private sector are being denied pay increases.

Additionally, Narvaiz said, city employees will receive pay increases, anyway, because the city is budgeting a second phase of adjustments to meet the recommendations of a study showing that the city pays its employees below market value. Budget plans call for about $750,000 to be added to employee salaries to bring the city closer to the market for those positions.

By cutting merit increases entirely out of the budget, the city would save about $423,000.

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0 thoughts on “City could revise budget assumptions

  1. Does anyone know the “market value” pay figure for city employees and how far below we are according to this study?

  2. Interesting that we are looking at a $70,000 budget shortfall.

    Is that before, or after this, pulled from the City Council salary article?

    “If all the compensation is approved, then the total city outlay to pay councilmembers and cover their expenses would come to $140,000.”

    The proposed salaries would come to $45,000 per year.

  3. The City of San Marcos continues to spend beyond its means. Total long-term debt increased from $122,310,000 (’05) to $136,010,000 (’06) to $175,990,000 (’07) to $247,750,000 (’08). These figures are from the annual financial reports posted online at the city website. (See “Table 5 City of San Marcos’ Outstanding Debt at Year-End” in each year’s report for the details.) In just the past 3 years we’ve more than doubled our total long-term debt. Doesn’t anybody else think this needs to change?

  4. Ted,

    The budget discussion and the council pay discussion took place at the same meeting. The general budget conversation took place first. The shortfall concerns the present budget, which doesn’t have council pay in it.

    They’re really early into the FY 2010 budgeting process right now. The conversation was about how general guidelines, policy goals and tax collection trends could influence the budget. The 23-page memo the council worked from last week doesn’t include a line-by-line budget proposal.

    Later came the discussion about council pay. Presumably (duh), they’ll work the council pay and the expenses into the real budget proposals, one with the old assumptions and another assuming no tax revenue increase.

    To the question about how the city pays relative to the market, Newstreamz published this story last August:
    http://www.newstreamz.com/2008/08/21/council-workshop-looks-at-fiscal-issues/

    The upshot is that firefighters were 11.89 percent below market, police were 6.22 percent below market, service-maintenance people were 20.3 percent below market and paraprofessionals were 3.9 percent below market.

    The study compared City of San Marcos salaries with those paid by Denton, Round Rock, College Station, Bryan, Temple, Cedar Park, New Braunfels, Conroe, Georgetown, Pflugerville, and Texas State University.

  5. Reference the employee salary comparisons: The list of cities for salary comparison is a good one except for two distinct gaps: Austin and San Antonio. The fire department loses many good rookies, people we should be able to retain, to these cities. I suspect the pay scales in those cities may be a bit over what they could be but, regardless, San Marcos ends up being the stepping stone. They are our competition for young, capable employees who have put down roots in central Texas but have not yet declared their loyalty to any particular community.

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